Reactions are coming in on the Prime Minister's announcement on the state of the economy. However one economist believes while the deficit is significant, the situation is manageable with the right measures, starting with enhancing tax compliance.
00:00With a projected deficit of $11 billion at the end of fiscal 2025, the Prime Minister has warned that the country is in a deep financial hole.
00:11However, economist Dr. Mali Nats says while the deficit is significant, the situation is still manageable and she is cautioning the country against panic.
00:21A lot of people are saying that it is clear that Trinidad and Tobago is bankrupt at this time. What is your take on that?
00:28Bankrupt is not a word I would use. Bankrupt means that you have no money to pay to do anything. That's what bankruptcy means. It means that you can't pay any of your bills.
00:38The fact is that Trinidad and Tobago has a heritage and civilisation fund. The fact is that Trinidad and Tobago also has an overdraft facility at the central bank.
00:46The fact is another option available to the government, which the Prime Minister spoke clearly on yesterday, is the refinancing of the treasury bills, which will bring revenue in for the government.
01:00So once you have money available to meet your bills, it may not be all of the money that you would like to have. You may have to borrow some.
01:06You know, there remains options for the government to manage.
01:11In addition, the government will pursue additional borrowings of at least $1 billion.
01:16But all of these things can raise the public debt, debt to GDP, and I think that is something that we need to keep an eye on because we're almost at 70% or thereabouts, and we need to keep an eye on that.
01:30Dr. Art says one of the government's most viable short-term options to boost revenue is enhancing tax compliance by whatever mechanism.
01:40The issue here is not about an institutional label, so whether it's called the TTR or the BIR as we know it, but about the resources and the capacity to collect taxes.
01:50The data suggests that we have a tax leakage of between $10 and $15 billion per year.
01:58We need to close that gap.
02:01The focus needs to be on things like technology to track income and enforce compliance to ensure that they recruit the right number and the right skill set of persons to do things like audits and to detect tax avoidance.
02:19She adds, while the government will want to fulfill its campaign promises, expenditure of rationalization is paramount.
02:27The Prime Minister indicated very clear instructions in terms of the laptops, and that is also likely not to be a small cost, that is likely to be something substantial.
02:36So we will see how all of these campaign commitments unfold in the coming weeks and months.
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